It’s no secret to Washington policymakers, our members, the media and, indeed, the general public that the National Association of Manufacturers (NAM) has been leading the charge for pro-growth, pro-competitiveness and pro-manufacturing tax reform for the better part of a decade, a goal that has become increasingly more important with each passing year. Read More
The National Association of Manufacturers is pleased that the House Judiciary Committee on March 21 is slated to consider the Mobile Workforce State Income Tax Simplification Act (H.R. 1393) introduced by Reps. Mike Bishop (R-MI) and Hank Johnson (D-GA). The bill, which has been introduced in several previous sessions of Congress, clarifies and simplifies the ability of states to tax nonresident employees temporarily working in the state and eliminate a tax and compliance burden felt by job creators and their workers. From our perspective, this commonsense legislation is more urgent than ever.
Many manufacturers have employees who travel outside their home states as part of their job. Unfortunately, these out-of-state assignments sometimes result in an arbitrary and punitive compliance burden and tax liability for both employees and employers. In particular, employees are required to track and comply with various tax filing requirements while employers are required to maintain records and withhold state income taxes for these employees. This compliance burden is particularly onerous for small and medium-sized manufacturers that do not have in-house tax departments.
H.R. 1393 would clarify that a state cannot assess state income taxes on a nonresident employee temporarily working in the state for 30 days or less in a calendar year. Conversely, states could legitimately tax nonresident employees working more than 30 days a year in the state.
We urge all members of Congress to support quick action on this important tax simplification legislation. Clarifying the ability of states to tax mobile workforces will free up resources for employers to use in their business and leave more money in the paychecks of their employees.
During the current debate on legislation to repeal Obamacare, the Senate may have the opportunity to vote on a provision—introduced by Sen. Al Franken (D-MN)—that would eliminate the ability of companies to deduct advertising and promotional expenses related to prescription drugs. This is a misguided idea, and we urge senators to reject this proposal. Long recognized as a legitimate and necessary business expense, advertising plays a critical role in the competitiveness of manufacturers and the success of their products. Advertising plays a central role in driving market growth and innovation, which benefits both the manufacturer and the consumer. In doing so, advertising also helps drive prices down by spurring competition. In contrast, disallowing a deduction for direct-to-consumer advertising of prescription drugs increases the costs to pharmaceutical companies by denying a legitimate business expense and also unfairly targets a specific industry for discriminatory tax treatment.
The National Association of Manufacturers (NAM) is releasing in-depth “Competing to Win” policy papers to equip Congress and the Trump administration with blueprints for delivering on manufacturers’ priorities. Today’s release is the second in the series and focuses on tax. For more on the NAM’s “12 Days of Transition,” follow @ShopfloorNAM.
If there is one single issue that could have the greatest positive impact on manufacturing overall, tax reform is likely that issue.
As it stands today, our tax code is dragging down manufacturers and holding us back. We have the highest corporate tax rate in the world, and some small manufacturers that are structured as S-corporations and file as individuals pay tax rates greater than 40 percent, which is absurd.
Our goal needs to be making the United States the most attractive place to manufacture and invest, and we will make great strides in that direction through pro-growth tax reform.
In the NAM’s “Competing to Win” agenda, released in early 2016 and now updated with in-depth policy blueprints, we lay out very clearly the problems and solutions for our elected officials, and we have shared this with President-elect Donald Trump’s transition team.
For manufacturers, a tax reform plan must include:
- Reduced tax rates on corporate and pass-through business income;
- A robust capital cost-recovery system;
- Strong research and development incentives; and
- Modern, competitive international tax rules.
A study released by the NAM in January 2015, titled A Missed Opportunity: The Economic Cost of Delaying Pro-Growth Tax Reform, found that comprehensive tax reform that includes this multipronged pro-growth tax package would substantially grow the economy and result in increased jobs and investment. Over a 10-year period, this pro-growth tax reform plan would:
- Increase GDP by more than $12 trillion relative to Congressional Budget Office projections;
- Increase investment by more than $3.3 trillion; and
- Add more than 6.5 million jobs to the U.S. economy.
Our outdated system is taking a toll on our economy. Just look at recent years’ slow growth, static investment and an employment rate that does not match our growth potential. Manufacturers stand ready to be the solution in generating economic growth that we have not seen in a very long time. We are not just identifying the problems, we are being the solution. After all, when manufacturing succeeds, America succeeds.
To view the blueprint, click here.
This blog is part of the NAM’s “12 Days of Transition” series, an effort to provide the presidential transition team and other Washington policymakers with a roadmap to bolster manufacturing in the United States. Read the other blogs in the series here.
The Treasury Department this summer blindsided small manufacturers with a proposal that could derail plans by many business owners to pass their companies down to future generations. The proposed regulations—which incorporate some of the most sweeping changes to estate tax policies in the past 25 years—could increase estate and gift taxes on family-owned businesses by an estimated 30 percent or more. Read More
Federal tax policy has traditionally recognized the unique relationship of Puerto Rico to the United States and has helped foster a strong manufacturing sector in the territory. Indeed, manufacturing is the leading private-sector employer and represents almost one-half of Puerto Rico’s economy. Read More
The NAM today joined 23 other business organizations in sending a letter to Treasury Secretary Lew outlining the severe impact of recent debt-equity rules proposed by Treasury on global and domestic businesses of all sizes throughout the U.S. economy.
The far-reaching and unexpected proposal released by Treasury April 4 gives the government broad authority to recast related party debt as equity, imposing new taxes on businesses and threatening legitimate and well-established business practices, from corporate reorganizations to day-to-day cash management. While the proposal was released as part of a package of guidance designed to curb cross-border mergers, these extremely broad regulations have nothing to do with this activity and will have a significant negative impact on a wide range of global and domestic manufacturers in the United States. Read More
Earlier this year, the NAM was quick to push back against the European Union’s (EU) plan to make public tax and profit reports for global companies operating in EU countries. Not only has the EU ignored our concerns, but it has proposed going one step further and extending the public reports proposal to so-called “tax havens,” which are to be determined by the EU.
Manufacturers believe that a fair and transparent tax climate helps boost living standards and economic growth everywhere. In contrast, requests for much more information than needed to assess a company’s tax liability, coupled with the public disclosure of this tax and financial information, will threaten economic growth and competitiveness on a global basis. Read More
It is abundantly clear to manufacturers in the United States that our current tax code has to go—it’s complicated and arcane, holds back economic growth and makes us less competitive. While we’re working hard to get lawmakers to update and improve our nation’s tax system, Treasury Secretary Jack Lew, with a stroke of a pen, managed to make a bad system significantly worse. Read More
In recent months, the NAM criticized some of the recommendations coming out of the Base Erosion and Profit Shifting (BEPS) plan spearheaded by the Organisation for Economic Co-operation and Development, particularly new information disclosure rules that will force companies to disclose sensitive business information and impose additional and unnecessary compliance burdens on them. Read More